Tuesday, April 7, 2009

For a long time, the dowdy and somewhat overlooked sister to the rather more glamorous new business sale; the development of existing customers?oraccount management as it's generally known?has suddenly become rather more attractive. With new business opportunities harder to come by for manycompanies selling business to business, and with increased competition driving down margins, many firms are finding their existing customers are the"cash in the attic" they need to take them through the current down turn.

Selling more to your existing customers has a number of virtues: as an established supplier, sales cycles are generally shorter, competitivepressures are less and margins are higher.

For a few businesses, like funeral homes perhaps, the scope for repeat business might be a little limited, but for most there's potential to eithersell more of what customers have already, or add other products and services. Selling more to your existing customers has a number of virtues: as anestablished supplier, sales cycles are generally shorter, competitive pressures are less and margins are higher. Which is why, as independent CRMconsultants, we're seeing sharp growth in companies looking to be more systematic in maximizing customer potential and using CRM technology tosupport it. The following are some of the simple ways firms are doing it:

Understanding Who Has What

While it might sound obvious, for many companies understanding who has what products or services is a challenge. It's not that the information isn'tthere necessarily, it's just not readily available to those that need it: the sales and marketing teams. We worked with a manufacturer of printingequipment whose customer data was spread across three separate databases and was unusable from a sales and marketing perspective. By consolidatingthe data into the CRM system the client was able to identify customers who owned older models of equipment, and was able initiate a highly successfulmarketing campaign aimed at upgrading them to newer, more cost effective machines. The investment in the supporting CRM technology was paid off inthree months.

While this example may sound extreme, we've seen variations on this theme time and time again, so for many companies making this information readilyavailable can be a quick and simple way of growing sales.

Understand the Customer Potential

Not all customers are equal, some have the potential for growth and some do not. The key to growing business from the customer base is to aligneffort with potential, which is something that rarely occurs without a systematic approach.

As an example, we recently worked with a client whose products were sold through a reseller channel. When they mapped their sales volumes as apercentage of each reseller's overall sales, they were surprised to find that many supposedly "minor" accounts were actually selling huge volumes,but of their competitor's products. Even more disturbingly, when they overlaid where their sales team were spending their time, it was often with thelocal or less demanding resellers rather than those who had the most growth potential. CRM technology can help companies gather the detailedprofiling data in order to more effectively assess customer potential, and having categorized the customer base appropriately, can be used to ensureresources and potential remain aligned.

Plan

Yes, this sounds both obvious and dull, but for many companies the management of clients is entirely reactive to who shouts loudest rather than whohas greatest promise. A structured planning approach can be a highly effective way of generating business because it helps focus activities on theareas of greatest opportunity.

We've seen one of the major financial services companies gain significant market share by embedding the planning process within their CRM system.They've consistently caught their competitors napping by concentrating significant resources in a highly coordinated way on accounts they'veidentified as having high strategic value. The CRM system very effectively supports the planning and sign off process itself, but has provedparticularly beneficial in providing visibility of agreed activities and progress to date. In effect technology avoids the fate of most planningdocuments?permanent incarceration in a dusty filing cabinet?to become living, breathing tools for growth.

Develop a Contact Strategy

In the good times it's easy to be focus on winning new business rather than developing existing customers. I suspect we're all familiar withsuppliers to whom we've given business but haven't heard from again. To some extent this may be understandable because in many new markets there's alimited window to "land-grab." However, for many suppliers this new business focus ends up being the equivalent of planting crops and not stickingaround for the harvest.

One simple way to balance this preoccupation is to determine a contact approach and frequency for each customer and manage it through the CRM system.This helps develop the strength of relationship with the client and provides for a considerably more fertile environment for sales growth.

Increase the Range of Contacts and Market to Them

Recent work with a client revealed that while they had a wide range of products and services that appealed to many areas of their customer'sbusinesses, their salespeople tended to foster a small number, of mostly lower level contacts, in their customer base. This was significantlyrestricting the growth of the business, as well as increasing customer attrition when these contacts moved on.

CRM technology can play a key role in helping ensure that salespeople extend the range and level of their customer contacts. In addition, byintegrating new communication channels such as telemarketing, customer service operatives, or email marketing, organizations can move fromcommunications that are restricted to the subjects the salesperson feels comfortable talking about to a much broader, more substantive dialogue withkey targets throughout the customer organization, with a view to substantially increasing the range of products and services sold.

While none of the above strategies are unduly sophisticated, for many businesses just getting these basics right can have a profound impact on acompany's performance. Over the years we've helped many companies significantly increase profitability through the more effective use of CRMtechnology, and more effective account management and development strategies have provided some the highest pay-back areas. In today's business tobusiness sales environment, this may just be the difference between success and failure.

I chaired the IIR Telecoms CRM, CEM and Retention conference in Berlin yesterday. It was a great day with some excellent speakers. Of all thespeakers, one stood out for me: Christian Magel, the Chief Marketing Officer of low-cost mobile telco Simyo in Germany.

Simyo is a relatively recent entrant in the crowded German mobile telecoms market. It provides a simple, no-frills voice, SMS and data proposition tocost-conscious customers. But that doesn’t mean that its customers don’t have any affinity for Simyo. On the contrary, it has a much, much higherproportion of brand advocates (as measured by the NPS score) than any of its much larger competitors. It is a real customer-centric company.

At the end of his presentation, Christian spoke about six guiding ideas for Next Generation CRM (with my own interpretation): 1. With the Internet, the Cost of Communications is Not the Issue - With the Internet, communications, whether they are voice-to-voice through a VoIP service like Skype, interactive like IM, or direct like email, are all effectively free. The real issue isn’t the cost, but the relevance of the communications to customers. If your communications are targeted, informative and timely, there is a good chance that customers will appreciate them, and you for providing them. Indeed, youth mobile telco Blyk, that offers free mobile minutes and SMS in return for listening to branded ads, found that many of its customers actually complained that they didn’t hear enough ads! This is quite a change from ‘maximum contacts per period’ rules used by most data-intensive companies, that explicitly acknowledge that the communications are, at best, irrelevant to customers, at worst, a damned nuisance! 2. Customer Loyalty Starts with Product Design - Loyalty shouldn’t happen by accident. It should be the natural response to explicitly designing, products, services and experiences that help customers get everyday jobs done. This means really understanding customers' needs, in terms of the jobs customers are trying to do and the outcomes they are trying to achieve, and how you can provide solutions that help customers. It also means designing products that really deliver what customers’ expect, wrap-around services that add real value to the customer and knitting them together so they deliver a superior end-to-end experience for the customer, particularly during that all important post-purchase, product usage period where customers really get value from the products they bought. 3. Bad Products have No Chance on the Internet - Simyo is an internet-based mobile telco. If its products don’t work properly the first time, customers will drop them immediately and tell all their facebook, twitter and calling community friends. In the same way we all quickly back-track out of websites that don’t work, are too slow, or that don’t have any sticky content. That doesn’t mean that products on the Internet have to be perfect or fully featured, but it does mean that they have to meet the customers’ core needs from the start. And at a suitable price point. This provides a great opportunity for disruptive innovators like Simyo, who provide products that meet customers core mobile telephony needs, without all the expensive, unused frills of traditional providers, at a rock-bottom price. Evolving and additional customer needs can be met later through a process of continuous innovation, in a similar way that companies like Google do. 4. It’s Not the Product, It’s the Customer - Most telcos and indeed, most companies, are still product-centric. Their annual report may say how customer-centric they are, but in reality, their whole world revolves around making better products and then trying to find customers to buy them. There is no wonder that 80% of their products fail on market entry and 60% fail on re-entry. In contrast to this, Simyo has built its business around understanding its customers’ needs, provides products, services and an experience that exactly matches them, and then delivering them to customers at a profit. By delivering value to its customers throughout the customer experience, Simyo has earned the right to be paid handsomely by them for doing so. Customer-centric business starts and ends with customers. 5. Don’t Stop with Loyalty, Evangelists can Achieve Much More - Customer satisfaction, retention and loyalty, and their relationship to profitability have been agued over for decades. But even emotionally committed, loyal customers arean’t enough. Not today. Companies need to provide enough value to customers so that they want to tell everyone else about it. The old saying was that a happy customer told five friends about it, on the Internet, they can tell 5,000 or even 5,000,000. And as research by Kumar on Customer Referral Value has shown, talkative customers can have a value to the company through their referrals of up to four times the value of their own purchases. 6. Crowdsource your Best Ideas from your Customers - Experts in innovation like MIT’s Eric von Hippel, estimate that up to 80% of successful innovations originate from customers. The challenge is in tapping into the right customers to see how they are using your products, those of competitors or a mash-up of different products to get important jobs done. Approaches like crowdsourcing, open innovation and lead-user innovation all provide a way to look outside your own company and to bring in winning innovations from outside. In Simyo’s case, they have hired hundreds of Simyo Paten who crowdsource answers to customers questions. With response times to email questions in hours rather than the more normal days, this is just one way to harness the wisdom of the crowd.

Christian’s six guiding ideas provide a great framework to think about Next Generation CRM. They encompass much of what is in Paul Greenberg’s CRM2.0 yet go much further at the same time. Take a look at how you stack-up against them. And where you must do better if you are to build brandadvocacy in your customers like Simyo has.

You can follow Christian and the Simyo team at the Simyo blog.

With great thanks to Christian for his stimulating presentation in Berlin.